Quick Ratio
Quick Ratio (Acid Test)
Liquidity RatiosA stricter liquidity measure that excludes inventory from current assets. Shows ability to meet obligations without selling inventory.
Formula
Quick Ratio = (Current Assets - Inventory) / Current Liabilities
Why it matters
More conservative than current ratio. Essential for businesses where inventory can't be quickly liquidated.
Indian example
Related terms
Learn the concept
Liquidity Ratios →From the research
How The Valuation Node Approaches Research
The research method behind The Valuation Node, how assumptions are stated, how sources are chosen, and how uncertainty is disclosed in every published analysis.
ValuationWhat Three Years of a Cash Flow Statement Reveals That One Year Hides
A single year of cash flow is a snapshot. Three years is a story. Learn what the trend reveals about earnings quality, funding, and sustainability.
ValuationComparing Two Companies on ROE, and Why the Higher One Is Not Always Better
Two companies can report the same ROE for very different reasons. DuPont analysis shows why an ROE built on leverage is not the same as one built on quality.